This is My Two Cents

Saturday, May 11, 2013

From the outset, let me say that I agree that we need a decent ubiquitous and reliable communication network in Australia. The benefits of being interconnected far outweigh the risks and make our lives richer and our economy stronger. My internet connection plays a regular role in my life, and permits me to work from home, watch my favourite shows and communicate with you good people.

However, I have some specific problems with the current National Broadband Network plan. I hope I can articulate them here clearly enough to make my point.

DISCLAIMER: I am not an expert on legislation or specific broadband technicalities. Nor am I paid by anyone to put my view. I am an ordinary tax payer with real concerns about where my tax dollars go and how effectively they are spent. I am not affiliated with any political party.

Time to ration the Kool-Aid!

The first issue I have is the group hysteria surrounding fibre optics. The Labor party has succeeded, it seems, in creating a culture of hysterical dependency in the minds of some people (on Twitter at least) that the future of Australia is tied to them having a fibre optic cable into their home. Nothing else is good enough. There is no middle ground. It's not open to debate, and we must have it at any cost.

These people have swallowed the whole keg of Labor Kool-Aid in one gulp, but they're ignoring the real world issues with the NBN that are occurring all around them. It's way behind schedule, major contractors are leaving, communities are being left with no connections at all, and revised cost estimates are starting to climb to staggering levels.

This unreasonable level of expectation has been placed in their minds because, in my view, it serves the Labor cause.

Not only that, they seem to be ignoring their real levels of use. If they measured their bandwidth usage, I suspect many of them would be quite surprised how little they really use.

And yet here they are, convinced that if they don't get fibre in their home, some great calamity will befall them and their descendants forever. There needs to be a calmer perspective. These people need to step back a little and consider their priorities.

I suspect this hysteria would disappear pretty quickly if it wasn't taxpayer funded, requiring them to pay for it out of their own pockets (which I suspect many of them could do now without an NBN, if they really thought it was life or death).

The Legitimately Needy

I recognise that there are legitimate flaws in our current infrastructure. It's clear that expansion by market forces results in an uneven structure that gives better service in some areas than others. I know first-hand of people severely affected by intermittent connectivity. It is those people who deserve priority, in my view. Government should direct resources to bringing their connectivity up to the levels of the rest of us, not into political priority areas or the 'easiest' to upgrade.

Cost/Benefit Analysis? Huh?

I still haven't decided whether the omission of an up-front Cost/Benefit Analysis was a deliberate act by Labor, or whether it was just incompetent bungling. Either way, the act of 'skipping it' has resulted in a torrent of claims and counter claims by all manner of 'experts' regarding the costs, benefits, capabilities and flaws in the NBN. Labor has benefited from this lack of clarity, but is now finding itself struggling to explain some of it's actions and counter the backlash from a growing number of businesses and economists concerned with the costs and lack of process transparency.

Labor didn't even pass it through their own major infrastructure assessment department, Infrastructure Australia, specifically set up by the Rudd Government to comprehensively assess large infrastructure projects!

A properly constructed, independent, wide-ranging Cost Benefit Analysis would go a long way to clearing up all of this mess. So far, only the LNP has committed to one (for both plans). I wonder why Labor hasn't?

What are we going to do with all that Bandwidth?

The people and organisations that will benefit most from super-sized data pipes into every Australian home are the entertainment giants. The bottom line here is entertainment. It's not life-saving e-Heath, or improved education opportunities. It's a golden opportunity for these giants to sell you something. And they're going to go to town. You're going to find your super fast data pipe clogged with meaningless crap so fast your head will spin. They have to. For NBN Co to make the mythical 7% commercial return on an NBN that some commentators are speculating may cost $80-$100 billion, they're going to have to charge some pretty large coin.

E-Health and internet-based education has been around for years. Neither of them need huge data bandwidth to work, because not only is the amount of data involved very small, but the very nature of that activity has the limitation that it's one-on-one, particularly in the home. Existing ADSL pipes are more than adequate to the task of video conferencing and streaming. Unless you have a household with 6 children all needing to stream classroom lectures at once, an ADSL quality link will do just fine, and will continue to be adequate for a long time to come.

I recognise also that there may be households out there that legitimately need huge data pipes. Perhaps those people are hosting massively online role-laying games. I suspect in these cases they've already ponied up the cash and installed fibre, or they've moved their hosting to a business that provides that service.

Babies and Bathwater.

There's a very well-known axiom that applies here. It's "Don't throw out the baby with the bathwater". We already have an national established, functional, high-speed broadband network. It has flaws, yes, but it's largely very reliable, profitable and paid-for.

I will always advocate a gradual, sustainable approach to expansion of such a ubiquitous piece of infrastructure. A pure market-based expansion model can leave gaps, so some government involvement is appropriate.

But to have government just bulldoze it's way through it all and spend huge amounts of taxpayer debt (there's no real money left!) just so that we can download our entertainment faster, well, that's something I will never advocate.

Even if Labor were doing it right, which they obviously are not.

What of the LNP Approach?

The LNP plan suffers from the same lack of Cost/Benefit Analysis mentioned above. There is considerable speculation by everyone about all aspects of the plan. I feel this plan is a reaction to the poor performance of Labor's NBN rollout, and a reflection of the LNP political platform, which recognises the role businesses and market forces have to play in nation building.

I am encouraged by the rhetoric, but I am not convinced at this stage that all the claims are reliable. Only a full Cost/Benefit Analysis can put some 'meat on those bones'. There is enough there, though, to convince me it is a superior approach to that of Labor.

The Technology Race.

One of the more common comments I see on Twitter is that Labor's NBN will 'future-proof the Nation'. Not only is the term complete nonsense (nothing is future proof when you can't predict the future), but it applies less to the telecommunications industry than to most others.

There are few areas of human innovation more active than the field of data interconnection. There are new discoveries in all aspects of data interchange being announced almost every week. A great example is one announced a few weeks weeks ago: Hollow Fibre. What would that make of our $100 billion state-of-the-art NBN if this new technology becomes the norm?

In any case, the current world-wide uptake of mobile devices is arguably setting the trend away from fixed-line data exchange to wireless connectivity. Even in a wireless world, there will still be a need for high-capacity backbone fibre, but it won't be needed in the home.

Wednesday, March 6, 2013

I think the Gillard government's Carbon Tax is flawed to it's rotten core, and needs to be scrapped. We need to start again. This post explores why I think this, and outlines the approach I would like to see in legislation for future programs of this type.

DISCLAIMER: I am not an expert on legislation or tax law. Nor am I paid by anyone to put my view. I am an ordinary tax payer with real concerns about where my tax dollars go and how effectively they are spent. I am not affiliated with any political party.

Despite promising not to during the election campaign, the Gillard government commenced this tax in July 2012. It is a $23/tonne tax on the carbon (CO2) emitted by 300 of the top polluters in Australia. These taxed companies are permitted to on-charge the tax down the supply chain as they desire. There is no requirement for them to report the amount paid down the supply chain, but companies who do report their carbon tax impacts and are deemed to have misrepresented that impact will be prosecuted to the full extent of the law, risking massive penalties. The Gillard government waged a savage campaign against all businesses that dared to suggest any significant impact. In my view it bullied them into silence.

It's NOT a Carbon Price - it's a TAX

The Gillard government strenuously denies it's a tax. They say it's a price. I say it's a tax. Price is a value placed on something by the market. It is placed on all instances of that something. The price varies based on supply and demand as it is traded between entities. A tax is a levy imposed by governments from time to time. It has no constraints as to amount, or from whom it is collected. It is entirely determined by government decree. It's obvious that the carbon tax is exactly that - a tax. If it was a price, the market would set it and it would be on all carbon produced, not just that of a few companies.

Why Do Anything?

I support that we all need to reduce pollution wherever possible. Whether it's due to climate change or just because we want cleaner air, water and soil, I think it's important we do something. I support a broad-based tax that goes directly into Australia's effort as a country to improve the quality of our lives and make the future as clean as possible for our descendants. Most Australians want this, and I believe we are prepared to each make a small contribution to see that happen - as long as it's fairly distributed.

The Name needs changing!

I dislike the term 'Carbon Tax'. It should be 'Emissions Tax'. After all we are not just talking about carbon. Apart from the greenhouse effect, CO2 is arguably beneficial to plant life. It's all the other toxic chemicals emitted by our factories and fossil power stations that do the real damage!

The Spirit of the Thing

I want to play an active part in curbing unnecessary emissions that pollute my environment. I want to be able to see and measure my contribution, and to track how it's used. I believe most Australians want that too. We want our government to be the custodian of the process and the execution, and to provide legislative rigour to fair and equitable distribution of our collective contributions into worthy causes based on science, not politics or vested interests. Be it innovative energy sources or factory plans to reduce their emissions, I would like to see my tax money at work and to follow how recipients use it. That's the spirit!.

The Importance of Transparency

I know what you're thinking. You think I'm talking about transparency. Yes I am! The most important aspect of this tax is transparency. Governments of all persuasions talk it up in spades during election campaigns, but rarely get close to walking the talk. Every transaction that involves this money must show clearly the amount collected or claimed - right there on the invoice or receipt. No exceptions. We must encourage affected entities (people or businesses) to report their liability or benefit, not force them to hide it.

By making the tax liability calculations impossible to compute, making reporting non-mandatory, and by imposing outlandish penalties for affected entities that try but get it wrong, the Gillard government has effectively made it impossible for anyone to hold them and their policy to account. To me, that's a shameful, deceitful act by a government with serious failures to hide. I would respect a government that made a mistake and wasn't afraid for people to see it far above one that seeks to hide it away and lie about (spin) it.

Honesty is the best policy (and it might just protect you from those who would spin against you!).

Don't Demonise the Polluters - We need them!

Another aspect of this Gillard tax that I loathe is that it demonises the polluters. We as a nation have relied on these industries for many decades for jobs, energy, exports and manufactured goods. It abhors me that this tax hypocritically now penalises them in isolation for doing what they have been doing with our blessing for so long. We need a set of policies designed to help them develop cleaner ways of continuing their service, based on open transparency and mutual trust. No one want to see their costs spiral out of control forcing them to cut jobs or move offshore. A Labor government above all should recognise this!

Keep it Simple

I find this Gillard tax to be complex and dependent on too many things outside the control of government and the people it serves. The government needs to compensate people for a tax it levies on these polluters because otherwise the burden would be too high. But where does this money-go-round stop? The government can't keep compensating forever, and where's the real incentive for polluters to reduce their tax burden when they can just pass it on down the supply chain? I agree with the LNP on this. It is an unnecessary fiscal and regulatory burden on the taxpayers and businesses trying to compete on international markets.

A Better Alternative

This tax should be all about consumption. As we consume goods and services, we pollute our environment. We should have a tax that's low enough to bear, but high enough to make a difference. It should be simple and it should be transparent. I would like to see the GST increased to 11%, with the extra 1% to go directly into a federal fund for distribution by a government-business-scientific panel to innovations that reduce polluting emissions, fully accountable to the people. People and businesses come up with the schemes to reduce emissions, and apply for grants to the panel, who decides the amount based on sound scientific evaluation. Yes, some investments may not work out. We should all be prepared to accept that. But it must be transparent right down to the plans themselves and the money supplied.

Yes, I Know

I'm sure there are those out there who will supply all manner of reasons why this is unworkable. I don't accept ANY of them. The problems of systemic and prolonged pollution are obvious and very serious. If we have an honest, accountable, fearless, focussed and determined government, I know we can do this. Is it too much to ask? LET'S ASK ANYWAY.